Akums Drugs — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Akums Drugs reported a strong Q3 FY26, with double-digit revenue and EBITDA growth driven by robust performance in its CDMO and international branded formulation segments. Despite continued pricing pressure in the API business and a decline in trade generics, overall profitability improved significantly. The company is actively pursuing global expansion with projects in Europe and Zambia, while also focusing on operational efficiencies and strategic capital allocation.

Highlights

  • Operating revenue at INR 1,160 crores, up 14.8% YoY.

  • Total operating EBITDA at INR 147 crores, up 21% YoY.

  • EBITDA margins at 12.7%, improving 65 bps YoY and 338 bps QoQ.

  • CDMO segment revenue grew 16.3% YoY to INR 916 crores, driven by strong volumes.

  • International branded formulation revenue grew 18% YoY and 120% QoQ to INR 50 crores, with EBITDA up 135% QoQ.

Concerns

  • API pricing remained under pressure, leading to a negative EBITDA of INR 7 crores for the segment.

  • Trade generics revenue decreased 18% YoY to INR 25 crores, with a negative EBITDA of INR 3 crores.

  • One-time labour code impact of INR 18.2 crores in the past period, and INR 2.27 crores for the current 9 months.

Key financials

  1. Operating Revenue ₹1,160 Cr +14.8%YoY
  2. Total Operating EBITDA ₹147 Cr +21%YoY
  3. EBITDA Margin 12.7% +0.65%YoY
  4. PAT ₹68 Cr +2.1%YoY
  5. Cash Surplus ₹1,573 Cr
  6. Free Cash Flow ₹944.5 Cr

What they filed

Q1 FY27: revenue up 18.1%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue328 337 329 332 309 −6%369 +9%338 +3%392 +18%
EBITDA43 34 18 44 17 −60%25 −26%12 −33%49 +11%
Net profit50 41 28 45 23 −54%28 −32%15 −46%45 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹1,160 Cr Total
  • CDMO ₹916 Cr 79.0%
  • Domestic Branded Formulation ₹115 Cr 9.9%
  • API ₹54 Cr 4.7%
  • International Branded Formulation ₹50 Cr 4.3%
  • Trade Generics ₹25 Cr 2.2%

Order book

medium confidence

Total value

EUR 245 Mn

as of 2025-12-31 quantified

Execution

Commercial supplies from Plant 2 to Europe expected in H1 FY28.

The EU CDMO contract represents a significant long-term revenue stream, with commercial supplies expected to commence in H1 FY28 following regulatory approvals.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹57 Cr
    • Maintenance and modernization capex
    • Investment in dosage forms where capacities are stretched
    So the total capital expenditure that the company has made till now is INR165 crores for the 9 months. Around INR57 crores for this quarter.
  • Liquidity Cash ₹1,573 Cr Management is actively evaluating deployment opportunities for the cash surplus, focusing on strategic fit and valuation.
    We continue to have a very strong cash surplus of INR1,573 crores.

Guidance & targets

Revenue

  • Zambia Project Revenue from India Revenue · Calendar Year 2026 · High confidence $25 million
    So '26, we'll have $25 million of revenue in the calendar year '26 coming in, and then similarly, in calendar year '27 as well, we'll have $25 million of revenue coming in the CDMO.

    — Sahil Maheshwari

  • Zambia Project Revenue from India Revenue · Calendar Year 2027 · High confidence $25 million

    — Sahil Maheshwari

Commercialization

  • Zambia Facility Commercial Supplies Commercialization · Calendar Year 2028 · Medium confidence start
    Sometime in calendar year '28, we should start with the supplies from the Zambia facility only to Zambia, and then further explore what all we can do with that in the other neighboring nations.

    — Sahil Maheshwari

  • EU CDMO Commercial Supplies from Plant 2 Commercialization · H1 FY28 · High confidence start
    Following the receipt of EU GMP accreditation for our oral liquids facility Plant number 2 and are on track to start supplies in FY '28.

    — Sandeep Jain

Margin

  • Zambia Project Margins Margin · Long-term · Medium confidence 15-17%
    So, as we said, this will remain in teens, so largely 15-, 17-odd percent is what we expect.

    — Sahil Maheshwari

  • EU CDMO Contract Margins Margin · Long-term · Medium confidence teens
    As we said, this will also be slightly better than the existing 13% CDMO margins, but will remain in the teens only.

    — Sahil Maheshwari

Profitability

  • API Business Breakeven Profitability · Near-term · Medium confidence breakeven
    I do not have a timeline in mind of when this will turn positive on a monthly basis, but I can assure you that the management actions are in the right direction to bring it a breakeven at a breakeven by the efforts I've just mentioned in the earlier question.

    — Sahil Maheshwari

  • Trade Generics Bottom Line Profitability · Q4 FY26 · Low confidence much of the pain is a thing of past
    We still see, maybe Q4, we might have some hit on the bottom line, but much of the pain is a thing of past.

    — Sahil Maheshwari

Capacity

  • Injectables Facility Ramp-up Capacity · Q2, Q3 of next financial year · High confidence ramping up well
    But what we expect is as we proceed in the next financial year over Q2, Q3, this should start ramping up well and should contribute to our overall injectable CDMO business.

    — Sahil Maheshwari

  • Peak Capacity Utilization Capacity · Long-term · High confidence 55-60%
    while we operate at 47-odd percent, the peak we can do is roughly 55%, 60%, right?

    — Sahil Maheshwari

Growth

  • Domestic Branded Formulation Growth Growth · Next fiscal · Medium confidence at par with the industry growth
    From next fiscal as well, what we think, we should be at par with the industry growth.

    — Sahil Maheshwari

Market context

  • CDMO Volume Growth Volume · Q4 FY26 · High confidence double-digit
    since we are already have a visibility of Q4, in Q4 as well, we see a double-digit volume growth. So this, as of now, looks sustainable in the near term, at least.

    — Sahil Maheshwari

What to watch in Q4 FY26

Injectables Facility Ramp-up

Q2, Q3 of next financial year
Current Utilization in teens, minimal P&L contribution, INR 17.9 crores loss (9 months AHL)
Target Ramping up well, contributing to overall injectable CDMO business, profitability turnaround

Why it matters

Successful ramp-up of this new facility is crucial for CDMO growth and overall profitability.

But what we expect is as we proceed in the next financial year over Q2, Q3, this should start ramping up well and should contribute to our overall injectable CDMO business.

Risks & concerns

  • API Pricing Pressure

    medium

    API pricing remained under pressure, especially for cephalosporins, though the pace of decline moderated, impacting API segment profitability.

    Management acknowledged

  • Volatile Business Environment

    low

    The company operates in a volatile business environment marked by disruptions, but remains focused on long-term growth drivers.

    Management acknowledged

  • Labour Code Impact

    low

    A one-time labour code impact of INR 18.2 crores was recorded in the past period, with INR 2.27 crores for the current 9 months, treated as an exceptional item.

    Management acknowledged

Q&A highlights

7 direct
Sustainability of CDMO Volume Growth Direct
So this, as of now, looks sustainable in the near term, at least.

Analyst questioned if the strong CDMO volume growth was a one-off, and management confirmed its sustainability for the near term.

Asked by Vivek Agrawal

CDMO Margins Trajectory Direct
Having said that, as of now, these current level of margins are ones which looks predictable in the near term, while the aspiration is how we can further enhance these margin profile.

Analyst probed on future margin improvement for CDMO, and management clarified current levels are sustainable with aspirations for further enhancement.

Asked by Vivek Agrawal

API Business Turnaround Strategy Direct
So the focus is, how can we reduce our overhead, improve our gross margins, either through different portfolio or through different geographies? So that's how we look at the API business.

Analyst sought clarity on the API business outlook given past losses, and management outlined specific strategies for improvement.

Asked by Vivek Agrawal

Zambia and EU CDMO Contract Timelines and Margins Direct
So '26, we'll have $25 million of revenue in the calendar year '26 coming in... Sometime in calendar year '28, we should start with the supplies from the Zambia facility... EU GMP accreditation for our oral liquids facility Plant number 2 and are on track to start supplies in FY '28.

Analyst asked for detailed updates on key international expansion projects, and management provided specific timelines and revenue expectations.

Asked by Madhav Marda

Deployment of Cash Surplus Partial
So, Abdul, rightly, so we are actively evaluating multiple things which will complement our existing business, right, there are a few discussions, but nothing as of now is binding in nature.

Analyst inquired about the company's plans for its significant cash surplus, and management indicated ongoing evaluation without specific commitments.

Asked by Abdulkader Puranwala

International Branded Segment Recovery Direct
So the recovery has come both in terms of margins as well as in terms of top line to us. And the recovery looks stable as of now, so in Q4 as well, we expect a decent performance from this segment.

Analyst asked about the recovery in the international branded segment, and management confirmed strong recovery in both top-line and margins, expecting continued good performance.

Asked by Ikshit Naredi

API Pricing Model and EU Contracts Direct
So for the Europe, it's a fixed pricing, which we have currently agreed for this particular contract.

Analyst questioned if the percentage-based pricing model, which exposes profitability to API price volatility, applied to EU contracts, and management clarified EU contracts have fixed pricing.

Asked by Sangeeta P.

Injectables Facility Utilization and Profitability Direct
The utilization is relatively low. It is in teens as of now, right? And the utilization and the revenue contribution to the overall CDMO P&L is minimal. But what we expect is as we proceed in the next financial year over Q2, Q3, this should start ramping up well and should contribute to our overall injectable CDMO business.

Analyst sought details on the performance of the new injectables facility, and management provided current low utilization figures but projected significant ramp-up and contribution in the next fiscal year.

Asked by Vipin Goel

3 min read 7 chapters

Detailed narrative

Strong Q3 FY26 Performance Driven by CDMO and International Formulations

Akums Drugs & Pharmaceuticals reported a robust Q3 FY26, with operating revenue growing 14.8% YoY to INR 1,160 crores and operating EBITDA increasing 21% YoY to INR 147 crores. EBITDA margins expanded by 65 basis points YoY to 12.7%. This performance was primarily fueled by the CDMO segment, which saw over 16% top-line growth driven by strong volumes, and the international branded formulation business, which improved significantly with 18% YoY and 120% QoQ revenue growth.

Margin Expansion and Operational Efficiency

The company achieved improved profitability across segments, with overall EBITDA margins expanding 338 basis points QoQ. The CDMO segment's gross margin was over 37%, an improvement from 36.6% in the previous Q3. The international branded formulation business also saw significant gross margin expansion, reaching 35% from 25% in the prior quarter, indicating effective cost management and operating leverage.

Strategic Global Expansion Initiatives

Akums is actively pursuing global expansion, with key projects in Europe and Zambia. The EU CDMO contract, valued at an annual run rate of EUR 35 million until December 2032, is progressing, with commercial supplies from Plant 2 expected to commence in H1 FY28. The Zambia project is set to generate $25 million in revenue from India in both calendar years 2026 and 2027, with a local facility expected to begin commercial supplies in calendar year 2028.

API Business Turnaround Efforts

The API segment, despite a 35.4% YoY revenue increase to INR 54 crores, continued to face pricing pressure, resulting in a negative EBITDA of INR 7 crores. However, this represents an improvement from negative INR 11 crores in Q3 FY25 and negative INR 14 crores in Q2 FY26. Management is focused on portfolio rationalization, cost optimization, and shifting towards profitable non-cephalosporin products, aiming for breakeven.

Injectables Facility Ramp-up and Future Growth

The newly commercialized injectables facility is currently operating at 'in teens' utilization, contributing minimally to the overall CDMO P&L. Management anticipates a significant ramp-up in utilization and revenue contribution during Q2 and Q3 of the next financial year, which is expected to bolster the overall injectable CDMO business. The AHL overall business, which includes two plants, reported a loss of INR 17.9 crores for the first nine months.

Prudent Capital Allocation and Liquidity

The company reported a healthy cash surplus of INR 1,573 crores, with cash flow from operations at INR 1,109.5 crores and free cash flow at INR 944.5 crores. Capital expenditure for the quarter was INR 57 crores, bringing the nine-month total to INR 165 crores, primarily directed towards maintenance, modernization, and capacity expansion to support future growth in dosage forms. Management is evaluating M&A opportunities but remains cautious about strategic fit and valuation.

Capacity Utilization and Operational Strategy

Akums' overall capacity utilization stood at 47%, with a stated peak achievable utilization of 55-60%. This limit is attributed to the extensive changeovers, cleaning, and preventive maintenance required for manufacturing over 20,000 SKUs for 1,500 customers. The company maintains buffer capacity to meet excessive growth demands and continues to invest in capex for dosage forms where capacities are currently stretched.

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